Methods and systems for initiating electronic financial transactions from remote locations are increasingly common. Examples are the use of Automated Teller Machines (ATMs) to withdraw cash, and the use of telephonic systems and personal computers to initiate a transfer of funds between banking customer accounts, or to pay bills. Such transactions are commonly referred to as Electronic Funds Transfer (EFT).
Two principal advantages of EFT, from the perspective of the banking customer, are convenience and speed. They are convenient to the extent that they do not require banking customers to physically visit the bank in order to initiate a financial transaction. Electronic transactions are also completed more quickly than those involving paper instruments and/or documents that must be physically routed to different locations in order to complete the transaction. A significant disadvantage of present EFT systems, however, is that they are not equipped to accept certain financial instruments, such as paper checks, as part of the transaction. Since it is estimated that paper check volume in the United States exceeds sixty billion annually, this is a significant drawback.
Some approaches have been disclosed for converting paper checks to electronic transactions. Using an approach commonly known as Electronic Check Presentment (ECP), a bank of first deposit (the bank first receiving a paper check for deposit, hereinafter BOFD) will capture an electronic image of the check or otherwise convert the check to an electronic transaction for processing through a clearing house and the paying bank. The image of the check and/or check data essentially take the place in the settlement process of the paper check for the purposes of payment. For a general description of the ECP process, see U.S. Pat. No. 5,237,159. While the ECP method may speed transaction time, it offers no improvement in convenience for the banking customer who must still initiate the transaction by physically delivering the paper check to the bank.
A related approach allows a banking customer to write a paper check for purchases at the point-of-sale, typically a retail store, where the transaction is then converted into either an EFT or ECP transaction. Under this method, however, the banking customer is the payor. No provision is made for the deposit of checks by a payee.
Existing systems that perform electronic banking transactions are either not equipped to handle certain financial instruments such as paper checks, are configured only for bank-to-bank transactions, or do not accept third party checks for deposit. The resulting lack of convenience, and other drawbacks, limits the utility of such systems for bank customers.